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Facing sleepless nights due to the complex and tiresome online NBFC registration process? Let our experts at Enterslice simplify the process for you.
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Overview Types of NBFC Incorporation Procedure Timeline Documents Required Functions of NBFCs Challenges Eligibility Criteria Post-incorporation Compliances Schedule Meeting NBFC Registration in India – An Overview Aspect Details NBFC Full Form Non-Banking Financial Company Timeline It takes between 90 to 180 days to complete the NBFC registration process Types of NBFCs Types of NBFCs are divided based on: Regulatory Norms - (Base Layer NBFC- BL), (Middle Layer NBFC- ML), (Upper Layer NBFC- UL), and (Top Layer NBFC-TL) Business Activity - Investment and Credit Company (ICC), Investment Finance Company (IFC), Core Investment Company (CIC), Infrastructure Debt Fund (IDF- NBFC), Micro Finance Institution (MFI), Factor (Factoring NBFC), Mortgage Guarantee Company (MGC), and Peer to Peer Lending Platform (P2P) Eligibility Net Worth requirement Relevant experience No criminal record or history Valid company registration Business objectives to benefit the public Step-by-Step Procedure Step 1 – Mandatory Company Registration Step 2 – Prepare & Submit the Business Plan Step 3 – Application Review & Filing Step 4 – Collect & Submit Documents Step 5 – Issuance of NBFC Registration Certificate Documents Required Documents required for NBFC license registration include the following: PAN Card KYC of Directors & Shareholders MoA and AoA Credit Reports of Directors & Shareholders Board Approved Business Plan How can we help you? As your NBFC registration consultants, we can help: Offer expert guidance Simplify the NBFC license registration process Offer End-to-end registration process support Provide seamless post-registration support Reduce delays by leveraging our extensive process knowledge Build your Business Empire in Indian Economy worth $4 Trillion Let our business consultants make the journey of company registration easy. Get Started Now What is an NBFC? If you are an entrepreneur who wants to explore business opportunities in the financial sector, NBFCs offer a profitable option. NBFCs are financial institutions that provide loans and other financial services but do not operate like traditional banks. They don’t have a banking license, so they can’t offer savings accounts to their customers. Since 2020, NBFCs have been doing better than banks. As of September 2023, NBFCs have a 41% share in the microfinance sector of India, making them a good investment business. Another reason is that NBFCs don’t need to follow strict compliance like banks. They play an essential role in India's economy. Fill the credit gap through loans Support borrowers failing to get bank loans Finance MSMEs & start-up ecosystem Create employment opportunities Invests in high-risk, long-term infra projects Facilitate economic growth & development Types of NBFCs by Business Activity for NBFC Registration The role of NBFCs in India's financial sector is essential. They offer various services, such as loans, asset financing, and investment management, to individuals and businesses that are not served by traditional banks. NBFCs are classified into different types based on their functions and activities for NBFC registration. Investment and Credit Company (ICC) ICCs offer businesses and individuals financial services, including loans, investments, and credits. They play a crucial role in boosting credit availability and enabling financial inclusion across different sectors. Investment Finance Company (IFC) IFCs are focused on funding large infrastructure projects. They support long-term investments by financing the development of necessary infrastructure, such as highways, ports, and energy systems. Core Investment Company (CIC) CICs mainly invest in the securities of their group companies. They hold at least 90% of their invested assets through such investments. They also support the growth and development of partnerships via capital management. Infrastructure Debt Fund (IDF-NBFC) IDF-NBFCs specialize in directing investments into infrastructure debt. They finance long-term infrastructure projects through bonds and support essential sectors like energy, transport, and urban development. Micro-Finance Institution (MFI) MFIs are known for offering collateral-free small loans to low-income individuals and groups. They strive to empower underserved communities through financial support that helps them fulfil their personal and business needs. Factor (Factoring NBFC) Factoring NBFCs buy receivables from businesses, enabling instant cash flow. They help businesses manage their working capital by converting outstanding invoices into liquid assets, boosting operational efficiency. Mortgage Guarantee Company (MGC) MGCs offer mortgage guarantees, lowering lenders' risk. These guarantees facilitate home loan approvals and stimulate the housing sector's growth, particularly for first-time buyers. Peer-to-Peer Lending Platform (P2P) P2P lending platforms connect individual borrowers and lenders digitally via the Internet, bypassing traditional banks. They offer dynamic interest rates and flexible terms, encouraging alternative financing alternatives for borrowers and investors. Types of NBFCs by Regulatory Norms of RBI NBFCs in India are classified based on the regulatory norms set by the RBI. However, each category is subject to different compliance needs. Types of NBFCs based on regulatory norms of the RBI include the following. Base Layer NBFC (NBFC-BL) These are non-deposit NBFCs that offer loans to low-income groups. Their assets are worth below INR 1,000 crores, and they must meet regulatory authorities' annual compliance requirements. Middle Layer NBFC (NBFC-ML): Middle Layer NBFCs comprise deposit-taking and non-deposit-taking NBFCs. They manage more significant assets than the Base Layer NBFCs and are required to meet their compliance obligations quarterly. Upper Layer NBFC (NBFC-UL): The Upper Layer NBFC comprises the top 10 NBFCs identified by the RBI based on asset size and risk profile. Due to their essential financial market influence, they face monthly compliance reporting. Top Layer NBFC (NBFC-TL): Due to their size and likely impact on the financial system, these NBFCs are subject to the most rigorous regulatory oversight. The RBI regulates them strictly and boosts their supervision. What are the Benefits of NBFC Registration Online? NBFC registration online in India has various benefits not just for the Indian economy but also for entrepreneurs and NBFCs themselves. Promotes Financial Inclusion By offering credit to underserved markets, your NBFCs promote financial inclusion and contribute to the country's economic growth. Encourages Entrepreneurship Registered NBFCs give entrepreneurs a source beyond traditional banks to fund their business, thus promoting innovation. Boosts Economic Growth Your NBFCs actively support overall economic growth and development by funding small businesses and infrastructure projects. Develop Trust & Credibility By registering your NBFC, you adhere to RBI compliance and boost your NBFC's market credibility, helping you attract more clients. Diversified Financial Services Your NBFC enables a wide range of financial services, including loans, investments, and asset management, which adds to the country's diverse financial landscape. How to Register NBFC with RBI? As an entrepreneur, it's important to note that the NBFC registration procedure in India is a time-consuming process. The authorities typically take around 180 working days to issue the NBFC license. However, if the process is not followed or if the application form is incomplete, your process to register NBFC with RBI can get delayed, and you may not be able to receive your NBFC license from RBI within the given time limit. The step-by-step guide to complete the process to register NBFC in India: Mandatory Company Registration The first step is to register your company under the Companies Act, 2013. Secure a Certificate of Incorporation (CoI) from the Registrar of Companies. You must have the 10 crore as paid-up capital. You must submit a duly filled application form with all the correct details and then proceed to register NBFC. Prepare & Submit the Business Plan You need to create a detailed business plan to register NBFC with RBI, including a summary of how you plan to operate it and make money from it. Once the plan is ready, submit it to the RBI. Application Review & Filing Once you have submitted your application, the RBI reviews it to check if the details entered are correct and complete. The review ensures that you meet the required compliance. Collect & Submit Documents You must also collect all required documents to be submitted to the RBI. Documents like PAN Card, KYC, MoA, and AoA serve as proof of identity for you and your business. Issuance of NBFC Registration Certificate Once your application is reviewed and documents verified by the RBI, the NBFC registration certificate will be issued. Once you receive your RBI license for NBFC, you can legally start your business operations. How Long Does it Take to Get NBFC License Registration? NBFC license registration in India is a complex and lengthy process. The estimated time required for NBFC registration procedure takes between 90 to 180 working days to complete with guidance by our Enterslice team. Timeline details are given below: Company & Bank Account Setup – 15 Days each The most critical steps for entrepreneurs are to register their company and open a bank account for their business. Both these steps take around 15 days to complete. Drafting the Business Plan – 15 Days The next step for an entrepreneur is to prepare a detailed business plan, which includes business objectives, financial projections, an HR plan, and risk management. This step can take up to 15 days to complete. Capital Investment & Documentation – 30 Days Next, you must inject the required money into the business to comply with RBI guidelines and show that you have the amount necessary to run your NBFC business. You must also collect the essential documents to be submitted along with your application. CoR Application & RBI Feedback – 30 Days Next, RBI accepts your application to register your NBFC and shares its feedback, allowing you to proceed to the next step in your NBFC registration process. First-Level Approval by RBI – 15 Days First-level approval indicates that RBI has reviewed your NBFC registration application and is satisfied with it, which allows you to move on with your registration process. What are the Documents Required for NBFC Registration? NBFC registration requirements include submitting the following documents: KYC – Directors & Shareholders Professional Background of Directors and Shareholders Certified Memorandum and Articles of Association Credit Reports – Directors & Shareholders Confidential Banker’s Report- Directors & Shareholders Duly Attested Highest Education Certificate Copy CA certified Net Worth – Directors & Shareholders CA Certified Capital Structure of the Company Banker Confirmation – Rs. 10 crores FD in the NBFC's account Board-approved Business Plan Board-approved Financial Projections Board-approved Credit Policy Importance of NBFC License from RBI in Financial Sector As an entrepreneur, you must know the importance of NBFC license from RBI in the financial sector. Getting an NBFC license certificate helps it operate within a regulated framework. It is also essential in building trust and credibility. NBFCs cater to urban and rural sectors, offering loans and financial services to the unorganized sector to promote inclusive growth. NBFCs contribute significantly to bridging the gaps by traditional banks by providing financial services to small businesses and individuals with limited access to financial products. NBFC registration also supports economic growth by facilitating your company's offering of various financial services such as loans, investments, and asset management. NBFCs significantly impact the financial market's stability because they can manage different risks by operating as a financial intermediary. NBFCs also promote the growth of small-scale industries, creating job opportunities. NBFCs also provide higher deposit rates, helping mobilize public savings into investments. NBFCs adhere to RBI guidelines to maintain transparency and stability, promoting an inclusive and robust financial ecosystem. 10,000+ Experienced Professionals Comprehensive Guidance 98% Client Retention Rate Round-the-clock Support Schedule Meeting Functions of NBFCs with a NBFC License Certificate Your NBFC can play an essential role in the financial market by offering various financial services to promote the country's economic growth. The primary function of an NBFC with a NBFC license certificate is to contribute to the financial sector's overall growth. You contribute significantly as an entrepreneur by serving the unserved markets and promoting financial inclusion by making your offerings available to unorganized and small-scale industries. You can also facilitate the growth of individuals without access to traditional banks through loans and other financial offerings. You can also offer investment services and manage assets, helping your clients grow their wealth. Overall, your services can help your NBFC meet its functions and contribute to India's economic growth. Credit Provision Extend loans & credit to individuals and businesses in areas underserved by banks, facilitating financial inclusion. Investment Services Offer investment products & financial planning services to handle and boost your clients' assets through investment options. Asset Management Offer asset management services to help individuals and businesses streamline the return on their investments. Financial Inclusion Offer various financial services to underserved markets, boosting access to financial products and facilitating financial inclusion. Challenges Faced During NBFC Registration Process Funding Limitations :- NBFCs have limited funding options and depend heavily on banks and capital markets. Unlike banks and housing finance companies, NBFCs do not enjoy many refinancing alternatives. Complex Licensing Process :- The NBFC registration procedure is difficult and time-consuming. Complex regulatory approvals demand the involvement of NBFC registration consultants, adding to the overall cost of registration. Complex Compliance Requirements :- NBFCs must adhere to various compliance requirements depending on their type, making it challenging to handle operations and file accurate returns on time. Limited NPA Flexibility :- The strict categorization of Non-Performing Assets (NPAs) damages businesses with uneven cash flows. They need more flexible loan regulations to handle payments better. Lack of Statutory Recovery Tools :- NBFCs do not enjoy legal recovery mechanisms available to traditional banks, making debt recovery more complex and challenging. Disparate Tax Treatment :- Unlike traditional banks, NBFCs do not benefit from tax rules. These rules are unfair and pose issues with tax deductions and dual taxation on leases. Talk to Enterslice consultants, and let us help you overcome the challenges with minimum effort. Penalty for Non-Compliance with NBFC Registration Guidelines As an entrepreneur, you must ensure that your NBFC adheres to all mandatory rules, regulations, laws, and compliances, as violations can lead to penalties and impact its operations and reputation. The RBI has strict benchmarks to ensure that NBFCs follow all regulatory requirements. The penalties for non-compliance with NBFC registration guidelines are listed below for your understanding: NBFCs failing to comply with the RBI guidelines must pay heavy fines. If your NBFC repeatedly fails compliance, the RBI can cancel its license, forcing you to suspend operations. The RBI can start legal action against your NBFC and its directors for significant violations. If your NBFC continues to fail compliance, RBI can restrict its business activities and limit its service offerings. Non-compliance can damage your NBFC's goodwill significantly, leading to a loss of customer and investor confidence. Eligibility Criteria for NBFC Registration Online As an entrepreneur you need to follow the eligibility criteria guidelines set by the Ministry of Corporate Affairs and the Reserve Bank of India for your NBFC registration online in India: Checklist for the NBFC License from RBI Minimum net worth requirement - Rs. 10 crores Capital must be injected as Tier 1 capital Borrowed capital is not permitted 10+ years of experience must for Management Experience required in credit, risk, and retail Submitting a robust business plan The business plan should benefit the public at large RBI grants licenses based on the business plan A clear credit history is a must No loan defaults by directors or shareholders Associate companies must have a clean history Clean credit history of foreign subsidiaries Registration under Companies Act 2013 is must Can be a private limited or a public limited company Adherence to RBI regulations is a must Checklist for Directors & Shareholders for NBFC Registration Minimum of two directors required Minimum of two shareholders required Must be financially sound Must have a clean legal history Should meet the Fit and Proper eligibility criteria set by the RBI Should meet transparency in the source of funding Foreign individuals/entities can become shareholders Directors and shareholders must adhere to RBI guidelines Schedule Meeting Post Registration Compliance for NBFC License Certificate Since 2020, the RBI has introduced various mandatory post-registration compliances for NBFC license certificate, which include the following: CIC (Credit Information Companies) Membership FIU-IND Registration CKYC (CERSAI) Registration Compliance with the Fair Practice Code Anti-Money Laundering/Combating the Financing of Terrorism (AML/CFT) Training Risk Management Policy approved by the Board Filing of Returns - DNBS01, DNBS02, DNBS03, DNBS04A, DNBS04B, DNBS06, DNBS10 Form A Certificate Return Filing Fulfilment of Ratios: Capital to Risk-weighted Assets Ratio (CRAR) Liquidity Coverage Ratio (LCR) Leverage Difference between NBFCs and Banks Non-Banking Financial companies play an important role in the financial ecosystem of India. While banks offer conventional services to their customers, importance of NBFCs in providing flexible services can’t be ignored. So, if you’re an entrepreneur looking for more flexible, balanced or inclusive financial services, you can explore various NBFCs. We have explained the difference between NBFCs and Banks in the table below: Aspect NBFC Bank Regulation NBFCs are regulated by RBI Act Regulated under Banking Regulation Act, 1949 Deposits Can’t accept demand deposits like savings Can accept demand deposits like saving and current account Interest Rates Flexible interest rates Interest rates are regulated Foreign Investment 100% FDI allowed Up to 74% FDI allowed for private sector banks Credit Cards Can’t issue credit cards without the approval of the RBI Can issue credit cards to their customers Foreign Exchange Not allowed to deal in forex Authorized banks can deal in forex Authorized banks can issue International Debit Cards (IDC) Insurance Cheques Can’t issues cheques Can issue cheques Operational Focus Giving loans Leasing Investment Financial Services Various banking services Ownership of Money Gives loans, makes investments but does not hold deposits Holds and manages public deposits Importance Flexible lending option with a wide range of financial services Safe deposits and controlled financial stability. Why Choose Enterslice for NBFC Registration Online? As a consulting firm for NBFC registration online, Enterslice brings over 10+ years of industry experience in NBFC license registration. Our experts are well-versed in the process and can efficiently guide you through it, ensuring all regulatory requirements are met. Reasons why you should choose us for your NBFC License from RBI: Our Enterslice Consultants have a Deep Understanding of the RBI Guidelines We have a Healthy Network of 10,000+ CAs, CS, Lawyers and Consultants We have Successfully Registered 150+ out of 200 NBFC Registrations in India We Serve over 5000+ Pin Codes Across the Country We have an Impressive Success Rate of 98% We Offer Continued Post-registration Support to Register NBFC Help you Meet all your Regulatory Compliance Needs to Register NBFC with RBI Expertise in Handling your Paperwork to Secure NBFC License from RBI At 30%, our Turnaround Time is Quick and Best in the Trade for NBFC Registration Online We Help in Risk Mitigation for Easy Acquisition of NBFC License Certificate Frequently Asked Questions on NBFC License Registration What is NBFC full form? The full form of NBFC is Non-Banking Financial Company. NBFCs started operating in India in the 1960s after the Reserve Bank of India modified the Reserve Bank of India Act, 1934, in December 1964. What are some challenges faced during NBFC registration in India? Some of the challenges faced by the NBFCs during the NBFC registration process include the following: Asset quality concerns Liquidity crunch Regulatory compliance Risk management Technology adoption Asset-liability mismatches Funding diversification Fierce competition What is the regulatory body for NBFC that has secured NBFC License successfully? Registered NBFCs are regulated by the Reserve Bank of India (RBI) under Chapter III B of the Reserve Bank of India Act, 1934. What is an NBFC License certificate? An NBFC license certificate is permission from the Reserve Bank of India, allowing an NBFC to operate its business legally like a bank without needing a full banking license. How do I get my RBI license for NBFC registration Online? To get your RBI license for NBFC registration online, you need to follow all the regulatory and legal compliance, clear the eligibility criteria, submit the required documents and wait for approval. Can you name India's top NBFCs with a NBFC license registration? Some of India's top non-banking financial companies (NBFCs) include: Bajaj Finance Limited Mahindra & Mahindra Financial Services Limited Tata Capital Financial Services Limited Muthoot Fincorp Tata Investment Corporation Limited HDFC Credila What is NBFC registration cost in India? The NBFC registration cost in India includes registration fees, legal charges, compliance costs, and capital requirements. Your cost can increase if you avail yourself of the services of NBFC registration consultants. However, the total cost of obtaining the license can vary depending on various factors. You can contact us to know more. What is the role of NBFCs in the Indian economy? The role of NBFCs in the Indian economy is as follows: Delivering financial services Supporting underserved markets Encouraging entrepreneurship Investing in infrastructure development Promoting financial market stability Driving sustainable financial growth Creating jobs Why is Online NBFC Registration Essential? Online NBFC registration is essential for its convenience and ease. It streamlines the application process, simplifies the procedure, reduces the paperwork burden, and speeds up approval. What are the eligibility criteria for NBFC registration? NBFCs are required to meet several eligibility criteria, including obtaining a certificate of NBFC registration from the RBI. What are the new RBI guidelines for NBFC registration online? NBFC is required to follow the new RBI guidelines for NBFC registration online related to: Capital Sufficiency Governance Standards Risk Management Liquidity Criteria Disclosure Conditions Compliance with Technology What is the market share of NBFC? According to the available data, as of September 2023, NBFC microfinance organizations comprise 41% of the market share in India's microfinance sector, with banks accounting for 30%. It is noteworthy that since 2020, NBFCs' market share has grown considerably. What is the minimum net-owned fund for NBFC registration online? An NBFC should have a minimum net-owned fund of at least Rs. 10 crores to be eligible for NBFC registration online. What are the limitations of NBFC in India? Some of the limitations of NBFCs include the following: They can't accept demand deposits from their customers They can't issue insurance to their customers They cannot issue cheques to their customers Under which Ministry do NBFCs fall? NBFCs are managed by the Ministry of Corporate Affairs, Government of India. However, they are simultaneously regulated by the Reserve Bank of India. What is the qualification for a director of NBFC that is essential to know before NBFC registration? NBFCs have to comply with the qualifications of directors for their organization, including: Should meet the minimum qualification criteria. Should be a graduate in any relevant field to be eligible for an appointment to the post. An independent director can't serve on the board of more than three NBFCs (either NBFC-Middle Layer or NBFC-Upper Layer) at one given time. What is the minimum number of directors in NBFC? While a private limited NBFC must have two directors on board, having at least three to four directors is advisable. The directors should come from a combination of three Sectors: Banking, Finance, and Information and Technology (IT). Is RBI approval required to appoint a director in NBFC for NBFC registration? Yes, RBI approval is required to appoint a director in an NBFC for NBFC registration. The RBI must endorse the appointment to ensure the director meets all regulatory and fit-and-proper criteria. What are the fit and proper criteria for NBFC registration? The fit and proper criteria set by the RBI for NBFC registration ensure that individuals appointed to key positions within an NBFC meet specific suitability standards, including a clean legal and financial record, relevant experience and qualifications, and financial soundness. How much salary does an NBFC director draw? As per the data available, on average, NBFC director in India draws a salary ranging between ₹ 24.0 lakhs to ₹ 90.0 lakhs, with an average annual salary package of ₹ 43.5 lakhs. What are the minimum requirements for NBFC company registration? Minimum requirements for NBFC company registration include: Two directors Two shareholders Directors and shareholders can be the same persons They should be at least 18+ years old The director must be an individual Shareholders may be the corporate body Related Services Business Plan NBFC Software NBFC Annual Compliance Money Changer Compliance Funding in NBFC NBFC Takeover Prepaid Wallet License Payment Bank License Peer to Peer Lending License Housing Finance Company Registration IRDA Insurance License Registration of Mutual Fund with SEBI Our Awards Top 100 Companies in Asia - Red Herring Red Herring Top 100 Asia enlists outstanding entrepreneurs and promising companies. It selects the award winners from approximately 2000 privately financed companies each year in the Asia. Since 1996, Red Herring has kept tabs on these up-and-comers. Red Herring editors were among the first to recognize that companies such as Google, Facebook, Kakao, Alibaba, Twitter, Rakuten, Salesforce.com, Xiaomi and YouTube would change the way we live and work. Top 25 in India - Consultants Review Researchers have found out that organization using new technologies in their accounting and tax have better productivity as compared to those using the traditional methods. Complying with the recent technological trends in the accounting industry, Enterslice was formed to focus on the emerging start up companies and bring innovation in their traditional Chartered Accountants & Legal profession services, disrupt traditional Chartered Accountants practice mechanism & Lawyers. We partner with more than 100+ companies -- Testimonials Don't take our word for it “Enterslice use technology better than others. That saves time and money; Team enterslice is more efficient than traditional competitors, and that helps to pass on the cost advantage to its clients. The company is building a high-level transparency in legal services by optimum use of technology and process automation in consulting. I highly recommend this company.” Nilanjan Bandyopadhyay “Excellent advisory role by Enterslice Team. They are a trusted partners to us. Narendra and his team helped us with our pre NBFC applications and Post NBFC advisory services.” Amit Goel “Amazing services provided by your organization. They have completed our NBFC registration order within stipulated time period of 90 days. They provide constant guidance and support in the process. Their support in building fintech software is amazing.” Manisha Mantri “I chose Enterslice to start my new Indian adventure as entrepreneur, and respect my past experience i was surprised by their professionalism. In particular, Raksha T. followed my startup process, and i was delighted with her support on every moment. Great, great experience.” Antonio Colella “I came to know about Enterslice through a friend. Since then I have done GST Registration through them. The services are consumer centric and fast. I have recommended them to many of my acquaintance already.” Leena Krishnan “Great set of people working together. Very customer friendly. I am very satisfied with the food license registration services and will definitely come back for other similar requirements.” Arun Mahadik “They provided customized and Highly skilled CA &services. The management invests themselves in your work. They ensured timely NBFC registration and are always ready and prepared with excellent advisory services. The best part of working with Enterslice is they are not having expertise of law but they are well versed with Digital marketing skills &fintech business model.” Ketan Shukla “I have registered my Trademark through them. The application was filed within 3 days. And the charges were also very reasonable. We got TM Approved in 6 month’s time without any re-submission or objection. They charge high to deliver the best in industry.” Manish Pandy “I would like to thank the Enterslice team for the excellent business plan made by them. They understood our requirement and gave us exactly what we wanted. Thank you Team Enterslice.” Prashant Tipanis “Thanks for your services. The team is really professional. They make sure that things are delivered in time. The best part about Enterslice is the consultative approach and guiding us on all our business matters.” Akash Deep Haiden Group - UAE Subscribe to our Newsletter Stay updated with all the latest legal updates. 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Let our business consultants make the journey of company registration easy.
If you are an entrepreneur who wants to explore business opportunities in the financial sector, NBFCs offer a profitable option. NBFCs are financial institutions that provide loans and other financial services but do not operate like traditional banks. They don’t have a banking license, so they can’t offer savings accounts to their customers.
Since 2020, NBFCs have been doing better than banks. As of September 2023, NBFCs have a 41% share in the microfinance sector of India, making them a good investment business. Another reason is that NBFCs don’t need to follow strict compliance like banks. They play an essential role in India's economy.
Fill the credit gap through loans
Support borrowers failing to get bank loans
Finance MSMEs & start-up ecosystem
Create employment opportunities
Invests in high-risk, long-term infra projects
Facilitate economic growth & development
The role of NBFCs in India's financial sector is essential. They offer various services, such as loans, asset financing, and investment management, to individuals and businesses that are not served by traditional banks. NBFCs are classified into different types based on their functions and activities for NBFC registration.
ICCs offer businesses and individuals financial services, including loans, investments, and credits. They play a crucial role in boosting credit availability and enabling financial inclusion across different sectors.
IFCs are focused on funding large infrastructure projects. They support long-term investments by financing the development of necessary infrastructure, such as highways, ports, and energy systems.
CICs mainly invest in the securities of their group companies. They hold at least 90% of their invested assets through such investments. They also support the growth and development of partnerships via capital management.
IDF-NBFCs specialize in directing investments into infrastructure debt. They finance long-term infrastructure projects through bonds and support essential sectors like energy, transport, and urban development.
MFIs are known for offering collateral-free small loans to low-income individuals and groups. They strive to empower underserved communities through financial support that helps them fulfil their personal and business needs.
Factoring NBFCs buy receivables from businesses, enabling instant cash flow. They help businesses manage their working capital by converting outstanding invoices into liquid assets, boosting operational efficiency.
MGCs offer mortgage guarantees, lowering lenders' risk. These guarantees facilitate home loan approvals and stimulate the housing sector's growth, particularly for first-time buyers.
P2P lending platforms connect individual borrowers and lenders digitally via the Internet, bypassing traditional banks. They offer dynamic interest rates and flexible terms, encouraging alternative financing alternatives for borrowers and investors.
NBFCs in India are classified based on the regulatory norms set by the RBI. However, each category is subject to different compliance needs. Types of NBFCs based on regulatory norms of the RBI include the following.
NBFC registration online in India has various benefits not just for the Indian economy but also for entrepreneurs and NBFCs themselves.
By offering credit to underserved markets, your NBFCs promote financial inclusion and contribute to the country's economic growth.
Registered NBFCs give entrepreneurs a source beyond traditional banks to fund their business, thus promoting innovation.
Your NBFCs actively support overall economic growth and development by funding small businesses and infrastructure projects.
By registering your NBFC, you adhere to RBI compliance and boost your NBFC's market credibility, helping you attract more clients.
Your NBFC enables a wide range of financial services, including loans, investments, and asset management, which adds to the country's diverse financial landscape.
As an entrepreneur, it's important to note that the NBFC registration procedure in India is a time-consuming process. The authorities typically take around 180 working days to issue the NBFC license. However, if the process is not followed or if the application form is incomplete, your process to register NBFC with RBI can get delayed, and you may not be able to receive your NBFC license from RBI within the given time limit. The step-by-step guide to complete the process to register NBFC in India:
The first step is to register your company under the Companies Act, 2013. Secure a Certificate of Incorporation (CoI) from the Registrar of Companies. You must have the 10 crore as paid-up capital.
You must submit a duly filled application form with all the correct details and then proceed to register NBFC.
You need to create a detailed business plan to register NBFC with RBI, including a summary of how you plan to operate it and make money from it. Once the plan is ready, submit it to the RBI.
Once you have submitted your application, the RBI reviews it to check if the details entered are correct and complete. The review ensures that you meet the required compliance.
You must also collect all required documents to be submitted to the RBI. Documents like PAN Card, KYC, MoA, and AoA serve as proof of identity for you and your business.
Once your application is reviewed and documents verified by the RBI, the NBFC registration certificate will be issued. Once you receive your RBI license for NBFC, you can legally start your business operations.
NBFC license registration in India is a complex and lengthy process. The estimated time required for NBFC registration procedure takes between 90 to 180 working days to complete with guidance by our Enterslice team. Timeline details are given below:
The most critical steps for entrepreneurs are to register their company and open a bank account for their business. Both these steps take around 15 days to complete.
The next step for an entrepreneur is to prepare a detailed business plan, which includes business objectives, financial projections, an HR plan, and risk management. This step can take up to 15 days to complete.
Next, you must inject the required money into the business to comply with RBI guidelines and show that you have the amount necessary to run your NBFC business. You must also collect the essential documents to be submitted along with your application.
Next, RBI accepts your application to register your NBFC and shares its feedback, allowing you to proceed to the next step in your NBFC registration process.
First-level approval indicates that RBI has reviewed your NBFC registration application and is satisfied with it, which allows you to move on with your registration process.
NBFC registration requirements include submitting the following documents:
KYC – Directors & Shareholders
Professional Background of Directors and Shareholders
Certified Memorandum and Articles of Association
Credit Reports – Directors & Shareholders
Confidential Banker’s Report- Directors & Shareholders
Duly Attested Highest Education Certificate Copy
CA certified Net Worth – Directors & Shareholders
CA Certified Capital Structure of the Company
Banker Confirmation – Rs. 10 crores FD in the NBFC's account
Board-approved Business Plan
Board-approved Financial Projections
Board-approved Credit Policy
As an entrepreneur, you must know the importance of NBFC license from RBI in the financial sector. Getting an NBFC license certificate helps it operate within a regulated framework. It is also essential in building trust and credibility. NBFCs cater to urban and rural sectors, offering loans and financial services to the unorganized sector to promote inclusive growth. NBFCs contribute significantly to bridging the gaps by traditional banks by providing financial services to small businesses and individuals with limited access to financial products.
NBFC registration also supports economic growth by facilitating your company's offering of various financial services such as loans, investments, and asset management. NBFCs significantly impact the financial market's stability because they can manage different risks by operating as a financial intermediary. NBFCs also promote the growth of small-scale industries, creating job opportunities.
NBFCs also provide higher deposit rates, helping mobilize public savings into investments. NBFCs adhere to RBI guidelines to maintain transparency and stability, promoting an inclusive and robust financial ecosystem.
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Comprehensive Guidance
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Your NBFC can play an essential role in the financial market by offering various financial services to promote the country's economic growth. The primary function of an NBFC with a NBFC license certificate is to contribute to the financial sector's overall growth. You contribute significantly as an entrepreneur by serving the unserved markets and promoting financial inclusion by making your offerings available to unorganized and small-scale industries.
You can also facilitate the growth of individuals without access to traditional banks through loans and other financial offerings. You can also offer investment services and manage assets, helping your clients grow their wealth. Overall, your services can help your NBFC meet its functions and contribute to India's economic growth.
Extend loans & credit to individuals and businesses in areas underserved by banks, facilitating financial inclusion.
Offer investment products & financial planning services to handle and boost your clients' assets through investment options.
Offer asset management services to help individuals and businesses streamline the return on their investments.
Offer various financial services to underserved markets, boosting access to financial products and facilitating financial inclusion.
Talk to Enterslice consultants, and let us help you overcome the challenges with minimum effort.
As an entrepreneur, you must ensure that your NBFC adheres to all mandatory rules, regulations, laws, and compliances, as violations can lead to penalties and impact its operations and reputation. The RBI has strict benchmarks to ensure that NBFCs follow all regulatory requirements.
The penalties for non-compliance with NBFC registration guidelines are listed below for your understanding:
As an entrepreneur you need to follow the eligibility criteria guidelines set by the Ministry of Corporate Affairs and the Reserve Bank of India for your NBFC registration online in India:
Checklist for the NBFC License from RBI
Checklist for Directors & Shareholders for NBFC Registration
Since 2020, the RBI has introduced various mandatory post-registration compliances for NBFC license certificate, which include the following:
Non-Banking Financial companies play an important role in the financial ecosystem of India. While banks offer conventional services to their customers, importance of NBFCs in providing flexible services can’t be ignored. So, if you’re an entrepreneur looking for more flexible, balanced or inclusive financial services, you can explore various NBFCs. We have explained the difference between NBFCs and Banks in the table below:
As a consulting firm for NBFC registration online, Enterslice brings over 10+ years of industry experience in NBFC license registration. Our experts are well-versed in the process and can efficiently guide you through it, ensuring all regulatory requirements are met. Reasons why you should choose us for your NBFC License from RBI:
The full form of NBFC is Non-Banking Financial Company. NBFCs started operating in India in the 1960s after the Reserve Bank of India modified the Reserve Bank of India Act, 1934, in December 1964.
Some of the challenges faced by the NBFCs during the NBFC registration process include the following:
Registered NBFCs are regulated by the Reserve Bank of India (RBI) under Chapter III B of the Reserve Bank of India Act, 1934.
An NBFC license certificate is permission from the Reserve Bank of India, allowing an NBFC to operate its business legally like a bank without needing a full banking license.
To get your RBI license for NBFC registration online, you need to follow all the regulatory and legal compliance, clear the eligibility criteria, submit the required documents and wait for approval.
Some of India's top non-banking financial companies (NBFCs) include:
The NBFC registration cost in India includes registration fees, legal charges, compliance costs, and capital requirements. Your cost can increase if you avail yourself of the services of NBFC registration consultants. However, the total cost of obtaining the license can vary depending on various factors. You can contact us to know more.
The role of NBFCs in the Indian economy is as follows:
Online NBFC registration is essential for its convenience and ease. It streamlines the application process, simplifies the procedure, reduces the paperwork burden, and speeds up approval.
NBFCs are required to meet several eligibility criteria, including obtaining a certificate of NBFC registration from the RBI.
NBFC is required to follow the new RBI guidelines for NBFC registration online related to:
According to the available data, as of September 2023, NBFC microfinance organizations comprise 41% of the market share in India's microfinance sector, with banks accounting for 30%. It is noteworthy that since 2020, NBFCs' market share has grown considerably.
An NBFC should have a minimum net-owned fund of at least Rs. 10 crores to be eligible for NBFC registration online.
Some of the limitations of NBFCs include the following:
NBFCs are managed by the Ministry of Corporate Affairs, Government of India. However, they are simultaneously regulated by the Reserve Bank of India.
NBFCs have to comply with the qualifications of directors for their organization, including:
While a private limited NBFC must have two directors on board, having at least three to four directors is advisable. The directors should come from a combination of three Sectors: Banking, Finance, and Information and Technology (IT).
Yes, RBI approval is required to appoint a director in an NBFC for NBFC registration. The RBI must endorse the appointment to ensure the director meets all regulatory and fit-and-proper criteria.
The fit and proper criteria set by the RBI for NBFC registration ensure that individuals appointed to key positions within an NBFC meet specific suitability standards, including a clean legal and financial record, relevant experience and qualifications, and financial soundness.
As per the data available, on average, NBFC director in India draws a salary ranging between ₹ 24.0 lakhs to ₹ 90.0 lakhs, with an average annual salary package of ₹ 43.5 lakhs.
Minimum requirements for NBFC company registration include:
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Researchers have found out that organization using new technologies in their accounting and tax have better productivity as compared to those using the traditional methods. Complying with the recent technological trends in the accounting industry, Enterslice was formed to focus on the emerging start up companies and bring innovation in their traditional Chartered Accountants & Legal profession services, disrupt traditional Chartered Accountants practice mechanism & Lawyers.
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